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Aug 29, 2018

5 min. read

One of the most common questions from travellers is whether it’s better to use cash or credit cards. Here are the pros and cons of each option.

Using credit cards when travelling: the case for paying with plastic

Credit cards are arguably the more convenient option, since you won’t need to worry about carrying a wad of cash around. And unlike cash, if you lose your credit card, you haven’t physically lost anything of actual value.

What also makes credit cards appealing is that you can get a lower price compared with cash. When you use cash, you pay a fee to exchange your Canadian dollars for local currency, but if you use a credit card with no foreign transaction fees, then you’re getting the best rate possible. Even if you don’t have a credit card without foreign exchange fees, you’ll only be charged 2.5% on top of the current exchange rate, which is still arguably cheaper than using cash.

There’s always a risk that you could lose your card, so take a backup. And bring your debit card too just in case you need to get cash.

Using cash when travelling: the advantages of paying with bills

Credit cards aren't accepted in certain situations—think street vendors, smaller restaurants and public transportation. Also, some vendors and restaurants may offer a discount if you pay with cash.

Getting local currencies can be expensive if you’re not paying attention, as the exchange rate can vary quite a bit. Your bank is the most logical place to start, but they may charge a premium of up to 12%. Exchange bureaus are a good alternative, though also can charge a fair amount in service fees.

Generally speaking, the cheapest way to get cash is to use local ATMs when you’re abroad. Your home bank will still charge you 2.5% to 3.5% on top of the spend, plus any one-time fees, but it’s still likely your cheapest option. Now, if your bank or an exchange office back home has a rate of less than 3.5%, it may be worth exchanging a bit more in advance, since you know you’re getting a good deal. Don’t forget to check xe.com before you exchange any money so you know what the current rate is.

Benefit from our savvy travel tips

Get expert advice on sticking to your food budget when abroad. Also, here’s how to avoid paying crazy data charges while travelling.

Did you know you can order cash for your trip online? Find out more about CAA’s foreign currency service.

Image credit: iStock.com/galitskaya

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